An odd, symbiotic relationship has formed under the Texas heat dome between energy and cryptocurrency officials.
At issue is the massive amount of energy (globally, enough to power Sweden for a year, per the Harvard Business Review) required to mine Bitcoin, the digital currency that can be used as an alternative to buy goods and services and make investments.
The energy is used by powerful computers that solve complex “puzzles,” verifying transactions and creating bitcoins as a result, per a Nerdwallet description. Critics call the power-hungry industry a setback in efforts to reduce planet overheating.
Meanwhile, the Texas grid has been strained during extreme weather events.
The compromise: a unique “credit” system, which resulted in $31.7 million in August for Riot in exchange for turning off its computers. The state’s grid operator, ERCOT, paid the credits, per a report from CNBC.
It was a timely source of funds for Riot. The crypto market has been up and down, and the company lost $500 million last year after earning a bounty in 2021.
If ERCOT pays the bitcoin miners slightly more than they would have made while operating — even a penny, per CNBC — then the miners will cash the credits and halt the digital shoveling.
“August was a landmark month for Riot in showcasing the benefits of our unique power strategy,” Riot CEO Jason Les said in a statement reported by CNBC.
As part of the relationship, crypto miners buy surplus power when there is excess. CNBC reports that this helps to keep power prices stable.
The industry isn’t without critics. Earthjustice reports that crypto mining in the United States was estimated to be “responsible for” 27.4 million tons of carbon pollution from mid-2021 to 2022. That would be three times the carbon pollution caused by the country’s largest coal plant in 2021.
Watchdog and crypto leaders are at odds on sustainability. In early 2022, the Bitcoin Mining Council claimed that more than 58% of the industry used “sustainable electricity … making it one of the most sustainable industries globally.”
Earthjustice calls it “greenwashing,” charging most U.S. miners with pulling power from the dirty-energy-fueled grid. In Texas, more than 60% of electricity is generated from gas and coal, according to the state.
For now, the energy bartering is credited by proponents as helping to stabilize the Texas power supply. But Earthjustice watchdogs question larger, planet-warming implications.
“The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress towards achieving climate goals,” the watchdog reported.
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